Even Ernie Eves and Mike Harris knew that wasn't fair, so the finance minister instituted a program to reduce Toronto's business-education tax rate to a reasonable level over a period of five years. Unfortunately he cancelled the phase-in two years later, and the McGuinty government, crying poor, has failed to bring it back. The result is that today, the excess provincial take is a major component of the "tax gap" that is driving investment out of town.

But something quite astonishing happened when taxes did fall. Between 1998 and 2000, a period when assessments were frozen, the Business Education Tax rate in Toronto fell about 10 per cent -- equivalent to a 5-per-cent cut in overall business taxes. But when Ontario properties were revalued in 2001, it turned out that commercial assessments in Toronto had increased by about 40 per cent.

By comparison, commercial assessments in the rest of Ontario, without the benefit of steep BET cuts, only increased 14 per cent over the same time period.

Even if the Toronto tax cuts were responsible only for a fraction of the huge gain in property values, they were self-financing -- just as supply-side theory predicts.

Over the same two-year period, Toronto gained an impressive 100,000 new jobs -- the sharpest growth in employment since the mid-1980s. Was that a coincidence? I don't think so. Nor does coincidence seem to explain why employment immediately levelled off and began to decline when the tax cuts stopped.

About Me

I love the city of Toronto. I have lived both in the city and in the 905 region. I have worked in the city my entire life. What prompted me to start this blog was a fear that Toronto was quickly going downhill. I hope that this could be a place where to discuss the issues that are unique "South of Steeles".